How Can Social Security Affect My Taxes?

Millions of Americans receive Social Security benefits, counting on them to help them make ends meet in retirement. But many don't realize that in some cases, Social Security can be taxable, adding to your tax bill at a time when you can least afford it.

In the following video from The Motley Fool's series on retirement investing, sponsored by TD Ameritrade, Fool consumer finance expert Dayana Yochim talks to Dan Caplinger, the Fool's director of investment planning, about the rules for Social Security taxation. Dan notes depending on your other income, as much as 85% of your Social Security benefits can end up subject to taxation. Although you won't pay an 85% tax rate, the taxable portion of your benefits will be subject to tax at whatever your normal tax rate is. To figure what you'll have to include as taxable, you take half your Social Security benefits and add them to your other income. If the amount is above $25,000 for single filers or $32,000 for joint filers, as much as half of the amount over those thresholds can be subject to tax; above $34,000 for singles and $44,000 for joint filers, that maximum rises to 85%. Dan concludes that planning to avoid Social Security taxation is hard, but one avenue that's open is to use Roth IRA distributions -- as they're not included in the "other income" calculation.

Learn more about Social Security
Even though some of your Social Security might get taxed, you still need to get as much in benefits as you can. Get more details on boosting your Social Security benefits by reading our brand-new free report, "Make Social Security Work Harder for You." Inside, our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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